Many of the comments made about my little piece are perfectly valid. Social policy is only one of many factors impacting on economic growth. Countries also differ on such things as enterprise culture, work ethic, risk aversion, economic liberalism etc. and it is often hard to divorce social policy from the others.

But the Howard Government and its supporters have been constantly using the US, UK and NZ experience to ‘prove’ their case – implying a causal relationship between social policies and economic growth. This is silly. Such crude international comparisons are not what I was about. I was only pointing to the Nordic experience as evidence of COMPATIBILITY between large scale redistribution (larger than in Australia) and strong economic performance, provided the mix of redistribution instruments was well chosen (less employment regulation and more fiscal activism). A number of much more systematic and scientific papers than mine (including from the OECD) have concluded that the policies embraced by the Scandinavians explain a good deal of their success in reconciling efficiency with equity. It is not the whole story but it is part of it.

And by the way Col Rouge is very selective with his life satisfaction ratings. Had he looked at the Nordic countries he would have found that they, like Australia, rate among the happiest. According to World Values Survey, Denmark, Iceland, Netherlands and Austria (all model 4 countries) rate higher than Australia in ‘subjective well being’ and much higher than Britain and the USA.

That said, I accept that we could never come even close to embracing the Nordic model, if only because of cultural differences and different attitudes to taxation but we could learn a few lessons from the Nordics (as well as the Anglo-Saxons) The Howard Government is taking a series of small steps towards the US model. Why not take a few small steps towards the Nordic model e.g. adopt their ideas on training, education, active labour market programs, work-to-welfare incentives and early childhood intervention policies? The American way isn’t the only way.

Pancho, “Why haven’t the alternative parties used the success of Scandinavian societies as a model for a serious alternative to the direction Australia seems to be heading?” What alternative parties are you talking about, we only have one party, with a couple of factions. They try to fool us into thinking they offer options, can you see any from any of them.

Freddy, I like you article Its a good analyse of whats happening, but like most academics, has no real answers. Just semantic suppositions. Not being a number cruncher or academic, yet may be classed a successful business person. I see my employees as the backbone of my business and reward them accordingly with livable wages and bonuses. As the business has frown, so has their income. 95% of my staff have been with me for more than 7 years. I no the strength of their loyalty, When I sold up and relocated to tas, they asked to move with me. That's make them happy and me feel really successful and happy.

The excuse used by the non caring corporates, constantly telling us that they are there for their shareholders, are basically lying. they own most of the shares and hold the top jobs, receiving monstrous incomes for little work, so they get it both ways. The small shareholder or those that have been stupid enough to put their money into institutional superannuation corporations are just feeding the corporates.

Progress and success comes with a happy comfortable population, not the greed of a moronic corporate elite. Hows your smile Col.

Freddy I was not selective at all. I responded to France and Germany only because you identified them as particular examples or instances as in your article – viz.

“Model 3 is found among the larger continental Europeans such as France and Germany and some of their neighbours. It redistributes on a large scale, making extensive use of EPL and unconditional income support.”

The negative correlation derived from my comparison of the life satisfaction and tax/earnings ratings was based on the data for all the countries available from the www.nationmaster.com tables, where their was data in both instances (ie I ignored the tax /earnings rating of countries which had not supplied life satisfaction data)

To itemise, some, from the nationmaster data

Country
Tax to Earnings
Life Satisfaction

Australia
23.1
7.3

Denmark
44.2
8.0

Finland
45.9
7.5

Norway
37.0
7.4

Sweden
48.6
7.5

Then we might look at

Switzerland
29.5
8.0

Those “happiest of all” Swiss with a Tax environment a lot closer to Australia than Scandinavia.

Now I would suggest, compared to Australia, losing around 25% of your gross income (which is probably closer to 70% of your disposable income) in tax for “wealth redistribution” is not a good “investment” based on the very marginal increases in “life satisfaction”.

I have forwarded what I produced on to Graham Young for transmission to yourself and your review.

I have used all and only the data which was available at www.nationmaster.com
I have not contrived to load or stack the results.
Should you find any errors, please correct for them and present your own “corrected” results.
However, considering the marginal effect of individual results on correlations, I doubt you will reveal anything of significance.

Heavy government intercession strategies are the tools of the the Cromwellian Levellers and the failed Eastern European Economies, who perceived, wrongly, a danger from people developing to their own full potential by exercising the greatest personal discretion over both their individual earning and spending capacity.

My greatest concern is, how many “real” opportunities are lost when repressive tax regimes stifle the incentive and innovation of individuals?

I think we are well on the road to American style economy where the General Motors workers in Flint Michigan are being offered pay cuts off 50% and loss of their medical benefits as the company punishes its workers for loss of market share. Meanwhile the boss continues to collect a multimillion dollar salary for directing production lines to produce vehicles the consumers don't want.

Look at the article by Martin Flanagan in The Age saying that Australia is going from Victorian values to Georgian values. He mentions "Slavery"

In the book review section there is an article headlined Oliver Twist was a slave.

On Channel 2 this weekend there is a program that says the concept of race was devised to justify slavery.

No, its not a good time in a Australia to be a wage or salary earneror small business owner, but its an excellent time to be an employer of 100+ employees.

Like Fred, I am saddened to see Australia to take this road and I feel its so unnecessary.

Yes

I think the amount people are taxed by each country is misleading because many of those countrys have been running deficits (borrowing money) each year which in the end will need to be payed back in the future. From what I know Australia doesn't hasn't had a deficit for many years and has been paying down the debt.